Uncovering Motive as Empirical Evidence of Asset Misappropriation in Local Government

Abstract

Background: Fixed assets owned by local governments have been widely misused, resulting in audit findings in local government financial statements.

Aims: This study aims to determine the motives of public staff in misappropriating assets.

Setting: This study uses empirical analysis conducted at institutions responsible for managing local government fixed assets. Three institutions categorized as "bedroom practice" and two institutions classified as "best practice" were involved.

Research Method: The grounded theory method is employed, starting from empirical data in the form of contextual conditions of asset misappropriation found in several local governments. These contextual variables interact with phenomena, resulting in a process of interaction and/or consequences that become propositions.

Result: A theoretical model was developed as a proposition related to the motive for asset misappropriation.

Conclussion: The legacy of the past in the form of organizational culture and asset management systems as causes, then give rise to the underlying motives of the perpetrators; (1) the relationship between the perpetrator and the authorities, (2) the form of reward, and (3) internal control.

Contribution: The resulting propositions can provide insight into the development of previous fraud theories, and can be further tested by positivists in quantitative research.